KIMBALL INTERNATIONAL INC - FORM 8-K - EX-99.1 - KIMBALL INTERNATIONAL, INC. EXHIBIT 99.1 - October 29, 2014

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Exhibit 99.1

SUPPLEMENTAL INVESTOR INFORMATION

KIMBALL INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

Kimball International, Inc. (the “Company”) will complete the spin-off of its EMS segment by distributing the related shares of Kimball Electronics, Inc. (“Kimball Electronics”), on a pro rata basis, to the Company's Share Owners of record as of October 22, 2014 (the Record Date). On October 31, 2014, each of the Company's shareholders will receive three shares of Kimball Electronics for every four shares of the Company held by such shareholder on the Record Date.

The following unaudited pro forma consolidated financial information is being provided as supplemental investor information and includes unaudited quarterly pro forma information for fiscal year 2014 to supplement the annual pro forma financial information provided in a previous investor presentation. A full set of unaudited pro forma consolidated financial statements will be filed after the spin-off is complete. The unaudited pro forma consolidated financial information contained herein is based upon the historical consolidated financial statements of the Company, adjusted to reflect the spin-off of Kimball Electronics. The following unaudited pro forma consolidated financial statements of the Company should be read in conjunction with the related notes and with the historical consolidated financial statements of the Company and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited pro forma consolidated statements of income for the fiscal year ended June 30, 2014 and for the quarters ended September 30, 2013, December 31, 2013, March 31, 2014, and June 30, 2014 give effect to the spin-off of Kimball Electronics as if it had occurred on July 1, 2013. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that the Company's management believes to be reasonable.

These unaudited pro forma consolidated financial statements are provided for illustrative purposes only and are not necessarily indicative of operating results that would have occurred had the spin-off of Kimball Electronics occurred on the date indicated.






KIMBALL INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands, Except for Per Share Data)
 
First Quarter Ended September 30, 2013
 
Historical Kimball International, Inc.
 
Kimball Electronics, Inc. Discontinued Operation (a)
 
Pro Forma Continuing Operations
Net Sales
$
317,439

 
$
(175,637
)
 
$
141,802

Cost of Sales
256,115

 
(156,559
)
 
99,556

Gross Profit
61,324

 
(19,078
)
 
42,246

Selling and Administrative Expenses
54,217

 
(12,079
)
 
42,138

Other General Income
(5,022
)
 
5,022

 
—

Restructuring Expense
402

 
(402
)
 
—

Operating Income
11,727

 
(11,619
)
 
108

Other Income (Expense):
 
 
 
 
 
Interest income
68

 
(13
)
 
55

Interest expense
(7
)
 
—

 
(7
)
Non-operating income
1,215

 
(276
)
 
939

Non-operating expense
(257
)
 
98

 
(159
)
Other income (expense), net
1,019

 
(191
)
 
828

Income Before Taxes on Income
12,746

 
(11,810
)
 
936

Provision for Income Taxes
3,563

 
(3,636
)
 
(73
)
Net Income
$
9,183

 
$
(8,174
)
 
$
1,009

 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
Basic Earnings Per Share:
 
 
 
 
 
Class A
$
0.24

 
 
 
$
0.02

Class B
$
0.24

 
 
 
$
0.03

Diluted Earnings Per Share:
 
 
 
 
 
Class A
$
0.23

 
 
 
$
0.02

Class B
$
0.24

 
 
 
$
0.03

 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
Class A and B Common Stock:
 
 
 
 
 
Basic
38,310

 
 
 
 
Diluted
38,596

 
 
 
 

Management believes it is useful for investors to understand that the Pro Forma Continuing Operations reported above include some expenses that are not indicative of the post-spin cost structure:
•
Estimated pre-tax cost of $1.6 million ($1.0 million after-tax or $0.02 per Class B diluted share) associated with the retirement and separation of employees due to the spin-off. Costs include salary, incentive compensation, performance shares, retirement contribution, and payroll tax.
•
Pre-tax loss related to decision to downsize the plane fleet from three jets to two and the resulting reclassification as held for sale, resulting in a $1.2 million impairment charge ($0.7 million after-tax or $0.02 per Class B diluted share).
Operating income includes pre-tax SERP expense of $0.9 million within Selling and Administrative Expense and is offset in Other Income (Expense), resulting in no impact on Net Income.






KIMBALL INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands, Except for Per Share Data)
 
Second Quarter Ended December 31, 2013
 
Historical Kimball International, Inc.
 
Kimball Electronics, Inc. Discontinued Operation (a)
 
Pro Forma Continuing Operations
Net Sales
$
320,313

 
$
(181,264
)
 
$
139,049

Cost of Sales
253,467

 
(160,224
)
 
93,243

Gross Profit
66,846

 
(21,040
)
 
45,806

Selling and Administrative Expenses
56,664

 
(13,888
)
 
42,776

Other General Income
—

 
—

 
—

Restructuring Expense
—

 
—

 
—

Operating Income
10,182

 
(7,152
)
 
3,030

Other Income (Expense):
 
 
 
 
 
Interest income
65

 
(12
)
 
53

Interest expense
(7
)
 
1

 
(6
)
Non-operating income
1,406

 
(473
)
 
933

Non-operating expense
(235
)
 
79

 
(156
)
Other income (expense), net
1,229

 
(405
)
 
824

Income Before Taxes on Income
11,411

 
(7,557
)
 
3,854

Provision for Income Taxes
2,189

 
(423
)
 
1,766

Net Income
$
9,222

 
$
(7,134
)
 
$
2,088

 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
Basic Earnings Per Share:
 
 
 
 
 
Class A
$
0.24

 
 
 
$
0.05

Class B
$
0.24

 
 
 
$
0.06

Diluted Earnings Per Share:
 
 
 
 
 
Class A
$
0.23

 
 
 
$
0.05

Class B
$
0.24

 
 
 
$
0.06

 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
Class A and B Common Stock:
 
 
 
 
 
Basic
38,434

 
 
 
 
Diluted
38,613

 
 
 
 

Management believes it is useful for investors to understand that the Pro Forma Continuing Operations reported above include some expenses that are not indicative of the post-spin cost structure:
•
Estimated pre-tax cost of $1.8 million ($1.1 million after-tax or $0.03 per Class B diluted share) associated with the retirement and separation of employees due to the spin-off. Costs include salary, incentive compensation, performance shares, retirement contribution, and payroll tax.
Operating Income includes pre-tax SERP expense of $1.0 million within Selling and Administrative Expense and is offset in Other Income (Expense) resulting in no impact on Net Income.






KIMBALL INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands, Except for Per Share Data)
 
Third Quarter Ended March 31, 2014
 
Historical Kimball International, Inc.
 
Kimball Electronics, Inc. Discontinued Operation (a)
 
Pro Forma Adjustments
 
Note
 
Pro Forma Continuing Operations
Net Sales
$
310,788

 
$
(185,680
)
 
$
—

 
 
 
$
125,108

Cost of Sales
250,496

 
(162,005
)
 
—

 
 
 
88,491

Gross Profit
60,292

 
(23,675
)
 
—

 
 
 
36,617

Selling and Administrative Expenses
52,578

 
(14,886
)
 
(413
)
 
(b)
 
37,279

Other General Income
(666
)
 
666

 
—

 
 
 
—

Restructuring Expense
—

 
—

 
—

 
 
 
—

Operating Income
8,380

 
(9,455
)
 
413

 
 
 
(662
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest income
43

 
(7
)
 
—

 
 
 
36

Interest expense
(7
)
 
1

 
—

 
 
 
(6
)
Non-operating income
357

 
(169
)
 
—

 
 
 
188

Non-operating expense
(250
)
 
71

 
—

 
 
 
(179
)
Other income (expense), net
143

 
(104
)
 
—

 
 
 
39

Income Before Taxes on Income
8,523

 
(9,559
)
 
413

 
 
 
(623
)
Provision for Income Taxes
1,315

 
(2,314
)
 
—

 
 
 
(999
)
Net Income
$
7,208

 
$
(7,245
)
 
$
413

 
 
 
$
376

 
 
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share:
 
 
 
 
 
 
 
 
 
Class A
$
0.18

 
 
 
 
 
 
 
$
0.01

Class B
$
0.19

 
 
 
 
 
 
 
$
0.01

Diluted Earnings Per Share:
 
 
 
 
 
 
 
 
 
Class A
$
0.18

 
 
 
 
 
 
 
$
0.01

Class B
$
0.19

 
 
 
 
 
 
 
$
0.01

 
 
 
 
 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
 
 
 
 
Class A and B Common Stock:
 
 
 
 
 
 
 
 
 
Basic
38,437

 
 
 
 
 
 
 
 
Diluted
38,750

 
 
 
 
 
 
 
 

Management believes it is useful for investors to understand that the Pro Forma Continuing Operations reported above include some expenses that are not indicative of the post-spin cost structure:
•
Estimated pre-tax cost of $1.6 million ($1.0 million after-tax or $0.02 per Class B diluted share) associated with the retirement and separation of employees due to the spin-off. Costs include salary, incentive compensation, performance shares, retirement contribution, and payroll tax.
Operating income includes pre-tax SERP expense of $0.2 million within Selling and Administrative Expense and is offset in Other Income (Expense) resulting in no impact on Net Income.







KIMBALL INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands, Except for Per Share Data)
 
Fourth Quarter Ended June 30, 2014
 
Historical Kimball International, Inc.
 
Kimball Electronics, Inc. Discontinued Operation (a)
 
Pro Forma Adjustments
 
Note
 
Pro Forma Continuing Operations
Net Sales
$
336,807

 
$
(198,949
)
 
$
—

 
 
 
$
137,858

Cost of Sales
269,245

 
(173,443
)
 
—

 
 
 
95,802

Gross Profit
67,562

 
(25,506
)
 
—

 
 
 
42,056

Selling and Administrative Expenses
57,268

 
(15,093
)
 
(1,110
)
 
(b)
 
41,065

Other General Income
—

 
—

 
—

 
 
 
—

Restructuring Expense
—

 
—

 
—

 
 
 
—

Operating Income
10,294

 
(10,413
)
 
1,110

 
 
 
991

Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest income
44

 
(9
)
 
—

 
 
 
35

Interest expense
(7
)
 
—

 
—

 
 
 
(7
)
Non-operating income
634

 
186

 
—

 
 
 
820

Non-operating expense
(472
)
 
201

 
—

 
 
 
(271
)
Other income (expense), net
199

 
378

 
—

 
 
 
577

Income Before Taxes on Income
10,493

 
(10,035
)
 
1,110

 
 
 
1,568

Provision for Income Taxes
2,645

 
(2,546
)
 
170

 
(c)
 
269

Net Income
$
7,848

 
$
(7,489
)
 
$
940

 
 
 
$
1,299

 
 
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share:
 
 
 
 
 
 
 
 
 
Class A
$
0.20

 
 
 
 
 
 
 
$
0.03

Class B
$
0.21

 
 
 
 
 
 
 
$
0.03

Diluted Earnings Per Share:
 
 
 
 
 
 
 
 
 
Class A
$
0.20

 
 
 
 
 
 
 
$
0.03

Class B
$
0.20

 
 
 
 
 
 
 
$
0.03

 
 
 
 
 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
 
 
 
 
Class A and B Common Stock:
 
 
 
 
 
 
 
 
 
Basic
38,438

 
 
 
 
 
 
 
 
Diluted
39,045

 
 
 
 
 
 
 
 

Management believes it is useful for investors to understand that the Pro Forma Continuing Operations reported above include some expenses that are not indicative of the post-spin cost structure:
•
Estimated pre-tax cost of $1.8 million ($1.1 million after-tax or $0.03 per Class B diluted share) associated with the retirement and separation of employees due to the spin-off. Costs include salary, incentive compensation, performance shares, retirement contribution, and payroll tax.
•
Pre-tax gain on sale of an idle facility of $1.7 million ($1.1 million after-tax or $0.03 per Class B diluted share).
Operating Income includes pre-tax SERP expense of $0.5 million within Selling and Administrative Expense and is offset in Other Income (Expense) resulting in no impact on Net Income.







KIMBALL INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands, Except for Per Share Data)
 
Fiscal Year Ended June 30, 2014
 
Historical Kimball International, Inc.
 
Kimball Electronics, Inc. Discontinued Operation (a)
 
Pro Forma Adjustments
 
Note
 
Pro Forma Continuing Operations
Net Sales
$
1,285,347

 
$
(741,530
)
 
$
—

 
 
 
$
543,817

Cost of Sales
1,029,323

 
(652,231
)
 
—

 
 
 
377,092

Gross Profit
256,024

 
(89,299
)
 
—

 
 
 
166,725

Selling and Administrative Expenses
220,727

 
(55,946
)
 
(1,523
)
 
(b)
 
163,258

Other General Income
(5,688
)
 
5,688

 
—

 
 
 
—

Restructuring Expense
402

 
(402
)
 
—

 
 
 
—

Operating Income
40,583

 
(38,639
)
 
1,523

 
 
 
3,467

Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest income
220

 
(41
)
 
—

 
 
 
179

Interest expense
(28
)
 
2

 
—

 
 
 
(26
)
Non-operating income
3,612

 
(732
)
 
—

 
 
 
2,880

Non-operating expense
(1,214
)
 
449

 
—

 
 
 
(765
)
Other income (expense), net
2,590

 
(322
)
 
—

 
 
 
2,268

Income Before Taxes on Income
43,173

 
(38,961
)
 
1,523

 
 
 
5,735

Provision for Income Taxes
9,712

 
(8,919
)
 
170

 
(c)
 
963

Net Income
$
33,461

 
$
(30,042
)
 
$
1,353

 
 
 
$
4,772

 
 
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share:
 
 
 
 
 
 
 
 
 
Class A
$
0.85

 
 
 
 
 
 
 
$
0.11

Class B
$
0.88

 
 
 
 
 
 
 
$
0.13

Diluted Earnings Per Share:
 
 
 
 
 
 
 
 
 
Class A
$
0.84

 
 
 
 
 
 
 
$
0.11

Class B
$
0.86

 
 
 
 
 
 
 
$
0.13

 
 
 
 
 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
 
 
 
 
Class A and B Common Stock:
 
 
 
 
 
 
 
 
 
Basic
38,404

 
 
 
 
 
 
 
 
Diluted
39,037

 
 
 
 
 
 
 
 

Management believes it is useful for investors to understand that the Pro Forma Continuing Operations reported above include some expenses that are not indicative of the post-spin cost structure:
•
Estimated pre-tax cost of $6.8 million ($4.2 million after-tax or $0.10 per Class B diluted share) associated with the retirement and separation of employees due to the spin-off. Costs include salary, incentive compensation, performance shares, retirement contribution, and payroll tax.
•
Pre-tax loss related to decision to downsize the plane fleet from three jets to two and the resulting reclassification as held for sale, resulting in a $1.2 million ($0.7 million after-tax or $0.02 per Class B diluted share).
•
Pre-tax gain on sale of an idle facility of $1.7 million ($1.1 million after-tax or $0.03 per Class B diluted share).
Operating Income includes pre-tax SERP expense of $2.6 million within Selling and Administrative Expense and is offset in Other Income(Expense) resulting in no impact on Net Income.





KIMBALL INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a)
Reflects the operations of Kimball Electronics, Inc. It excludes certain general corporate overhead expenses that were allocated to Kimball Electronics in its historical consolidated financial statements that do not specifically relate to Kimball Electronics. Such general corporate expenses do not meet requirements to be presented in discontinued operations and thus are presented as part of the Kimball International's continuing operations.
(b)
Reflects the removal of spin-off costs incurred during the fiscal year ended June 30, 2014 related to the spin-off of Kimball Electronics from Parent which were not included in the Kimball Electronics, Inc. Discontinued Operations column.
(c)
Reflects the tax effects of the pro forma adjustments at the applicable statutory income tax rates, adjusted for nondeductible spin-off costs.



KIMBALL INTERNATIONAL INC Reports